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It was a Monday afternoon in August 2012, and Dr. Samuel Donkor had just sat down to a traditional meal
at his favourite restaurant in Koforidua, Ghana: The Lindador. Donkor had recently returned from a visit
with his family in Toronto, Ontario. He looked forward to relaxing with this traditional Ghanaian dish of
pounded plantain (called fufu) served in palm nut soup. He had grown up in Koforidua eating fufu prepared
by his mother; and while his meal at The Lindador could never compare, it would be a much-needed
source of energy for the days to come. As founder and president of All Nations University College
(ANUC), Donkor would have a busy week of meetings ahead, not only preparing for the upcoming school
graduation but also reviewing the progress of his newly created purified-water business, Bella Springs.
Demand was increasing for Bella Springs’ sachets of purified water, and he needed to develop strategies to
increase the business’s current operational capacities. It was essential that he sit down with the operations
manager of Bella Springs, Osafo Thomas Larbi, to discuss how Bella Springs could position itself as a
successful high-growth company in a developing, and sometimes uncertain, Ghanaian economy.
KOFORIDUA AND GHANA
Located in West Africa on the coast of the Gulf of Guinea and bordered by Togo, Burkina Faso, and Côte
d’Ivoire, Ghana was a former British colony with a population of approximately 25 million people.
Through decades of peace and democracy, Ghana had developed into one of the few middle-income
nations in the region. Recent discoveries of oil and gas had helped fuel economic and infrastructure
development and stimulated westernization. Despite large improvements to living conditions over the past
two decades, large income gaps continued to exist. In 2012, the minimum daily wage was GH₵4.48,1 the
equivalent to approximately US$2.30.2 As of 2005, only 61 per cent of the Ghanaian population had access
to water services, and only 24 per cent had access to sewage services. These conditions created numerous
problems for people in need of clean drinking water.3
1 GHS = GH₵ = Ghanaian cedi; US$1 = GH₵1.95 on August 1, 2012. 2 All currnecy amounts are in U.S. dollars unless otherwise specified; “Minimum Wage in Ghana, 1963–2012,” AfricaPay
Ghana, accessed April 8, 2013, www.africapay.org/ghana/home/salary/minimum-wages/minimum-wage-timeline. 3 Caroline van den Berg and Alexander Danilenko, The IBNET (International Benchmarking Network) Water Supply and Sanitation
Performance Blue Book (Washington, DC: The International Bank for Reconstruction and Development/World Bank, 2011).
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Page 2
Although Ghana was best known for its capital city of Accra, the West African nation had many other
noteworthy cities, including Koforidua, the capital of the Eastern Region. Famous for one of the largest bead
markets in West Africa, Koforidua was home for approximately 130,000 people. The city was less
developed than the westernized city of Accra. People could comfortably live on only a few dollars a day and
typically made a living within the agricultural sector. This more rural and community-oriented lifestyle
meant Koforidua had no large shopping centres or franchised businesses. This lack of dominant competitors
helped small, local business owners to flourish through the sale of locally grown and locally made products.
DR. SAMUEL DONKOR AND ALL NATIONS UNIVERSITY COLLEGE
Dr. Samuel Donkor had grown up in Koforidua, Ghana. After finishing high school, he travelled to
Toronto, Canada, where he eventually earned two doctorate degrees in religious studies from the Canada
Christian College and School of Graduate Theological Studies. While in Toronto, he married and started a
family. Although he loved his new life in Toronto, he hoped to someday give back to his native country.
Following these dreams, he established the All Nations Full Gospel Church International and the All
Nations International Development Agency (ANIDA). ANIDA operated as a non-governmental
organization through which Donkor could raise money to help finance his grand mission of establishing a
leading educational institute within Ghana. In 1996, ANUC received national accreditation, moving
Donkor one step closer to achieving this dream. Years of planning and construction culminated in ANUC
opening its doors in 2002 to 37 charter students. Although located a short drive away from a polytechnic
institute, ANUC quickly became a popular post-secondary education destination for more than 3,000
students from Ghana, Nigeria, and various other African nations. Building on its strong connection to the
All Nations church, ANUC’s Bible studies program was the school’s primary focus. As the popularity of
the school grew, and as Donkor worked to strengthen ANUC’s ability to create future African leaders,
programs began to expand in the sciences, computer engineering, and business administration.
DONKOR’S MOVE INTO THE DRINKING WATER BUSINESS
The school led to the revitalization of Koforidua and to growth in its population, which now included more
students and business people. With such growth and development, the demand for purified water products
increased. In the hot and humid climate of Ghana, cheap and clean drinking water was always in high
demand. Water taken from a hose or kitchen tap carried a high risk of parasites, bacteria, and viruses that
could lead to numerous digestive problems and diarrhea. Popular in the area were small, recyclable
polythene plastic bags of water that residents could buy inexpensively, and the plastic bag could easily be
discarded or sold to recycling companies. These sachets of water were sold through small businesses and
by locals who walked through the streets and markets and were paid on sales commission.
Although the sachet drinking water business had some competition, the market remained largely
undeveloped, as high upfront investments increased the barriers of entry. Despite a dominant presence of
the Coca-Cola Company’s carbonated drinks, the corporation had not yet made a move toward the sale of
water products in Ghana, leaving a large gap for local, small businesses to meet demand. Some of the most
recognized sachet water brands included Standard Water, Special Ice Company Limited, Betta Water, and
Nyshera. Few brands originated in Koforidua, as most came from Accra, a two-hour drive away, and their
extensive distribution reached into the town of Koforidua and its surrounding townships, including the
towns of Oyoko, Jumapo, and Suhyen. Unlike the relatively diffused sachet market, the market for bottled
water was highly concentrated among a few top brands. Within Koforidua Township, this market was
dominated by Voltic.
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With his access to capital, to land with known underground water reserves, and to a potentially large
customer base at ANUC, Donkor hoped to capitalize on gaps in the sachet water market by providing a
cleaner, premium drinking-water product. He also knew that ANUC could not depend solely on student fees
to grow and develop; the water sachet business could be a valuable addition to the school’s other income-
generating projects. At a new ANUC campus location, a short distance outside of downtown Koforidua,
Donkor had built a small water-processing facility that pumped water from an underground reservoir. He
then invested in high-tech water filtration tanks and sachet-bagging equipment from a supplier in India for
$100,000 (see Exhibit 1). Because Donkor had no experience in the drinking-water business, he hired a
local, named Larbi, as the facility’s operations manager. Although Larbi was unfamiliar with the high-tech
equipment, he had worked for another small-scale sachet company in the area that used rudimentary and
slow-filtering methods. As most companies operated in a similar fashion, Donkor expected his company
would soon be able to produce larger quantities of the sachets at competitive prices.
Distribution and pricing strategies would be similar to those of the established direct competitors. Bella
Springs would sell a bag of 30 sachets for GH₵1 cash or credit to commercial vendors, who in turn would
sell each sachet for GH₵0.10. Bella Springs would drive the bags a short distance from its facility on the
outskirts of Koforidua to both the commercial vendors at the centre of town and to the ANUC campus,
where the sachets would be sold to students for the same price.
THE OPERATIONS OF BELLA SPRINGS
At Bella Springs, water was pumped from the ground through a borehole, which had been installed by
experts who claimed the surrounding area had a sufficient amount of water to supply the plant for the
foreseeable future.
The borehole constantly pumped water into two polyethylene storage tanks. The capacities for the storage
tanks were 700 litres each. They required monthly cleaning to ensure the water maintained an acceptable
level of cleanliness.
Fortunately, much of the process was automated. Water was pumped from the tanks through a 10-micron
cartridge filter and into the filtration facility. The pump could filter 12,000 litres of water every 24 hours.
The filter needed to be replaced monthly to ensure quality, and the pump had a life expectancy of five years.
The water was pumped to a 300-litre storage tank inside the filtration facility. Before the filtration process
could start, the storage tank needed to be filled to a minimum of 200 litres. When this minimum level was
met, the computer automatically triggered the filtration process. The water passed through six filters that
improved the water’s colour, taste, and quality. The filters could filter 400 litres every 30 minutes.
After passing through the filtration process, water was sent into one of two 400-litre tanks. The automated
sachet machine then drew the water from the tanks into single sachets and sealed the sachets. The machine
could bag 1,530 sachets in three hours. Each sachet held 500 millilitres. For every 100 sachets produced,
two were often found to be leaking or defective (see Exhibit 2).
With the help of two other employees, Larbi packaged the sachets into bags by hand. By working
efficiently together, the three employees could complete 60 bags per hour. Each bag held 30 sachets. The
employees worked shifts from 8:30 a.m. to 1 p.m. and from 1:30 p.m. to 6 p.m. (see Exhibit 3).
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Page 4
OPTIONS FOR EXPANSION
After the first month of full production, Donkor considered the next phases of operations for the plant.
Initially, Donkor had envisioned that Bella Springs would provide its drinking water in bottles, which had
prompted his purchase of a bottling machine in addition to the filtration equipment during his buying trip
to India. This machine had cost $50,000. The decision to utilize sachets was made shortly before the
installation of the filtration system, after having taken into account the potential environmental problems of
plastic bottles being littered in the surrounding area. Although the sachets were a more environmentally
friendly option for Bella Springs, Donkor hoped that production could move to plastic bottles in the future.
It was merely a question of the appropriate time for the switchover. Since the bottling machine had not yet
been utilized, the exact capabilities of the machine were unknown.
Larbi had expressed concern that the current sachet-filling system underutilized the capabilities of the
filtration equipment and that room was available to increase production. He had requested that Donkor
consider the merits of purchasing a second sachet-filling unit. A second device would require additional
staff to bag the finished product; Larbi predicted that three additional helpers would be sufficient to keep
the line running smoothly.
The current staff were paid GH₵200 per month.
Additionally, it was unknown how to distribute water beyond ANUC. A few small-scale filtration plants
supplied water to the area, utilizing similar sachet-filling equipment and distributing the packets through
local merchants. Donkor had hoped that because Bella Springs was the largest facility in the region,
distribution beyond Koforidua would be possible, but he remained uncertain as to how to begin increasing
distribution now.
Current options for increasing distribution included approaching street vendors who were already soliciting
sachet sales, but with the possibility of an eventual move to bottled water, Donkor was uncertain whether this
move was necessary. Other institutions were also potential customers for Bella Springs: Koforidua was the
capital of the Eastern Region, and Ghana had various government offices in the centre of the city. Naturally,
current water providers would not be pleased to hear of a new competitor, and how the community would
respond was uncertain. Although Bella Springs had its own logo, it remained an affiliate of the university.
CONCLUSION
Because purchases were often based on price and convenience, could Donkor efficiently create economies
of scale and produce 1,200 bags per day, thus achieving the desired target that would enable Bella Springs
to replace competitors in the area?
What would happen if the plant experienced problems with the purchased filtering equipment?
With so much uncertainty and so many questions to be answered, Donkor decided another bowl of fufu
would soon be needed—or, even better—a cold beer.
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EXHIBIT 1: VALUATION OF BELLA SPRING’S CAPITAL ASSETS
Assets Number Value
Building 1 GH₵200,000
Water Purification
and Bottling Plant 2 US$50,000
Delivery Truck 1 US$100,000
Note: GHS200,000 = US$102,855 as at April, 2013
Source: Dr. Samuel Donkor, March, 2013.
EXHIBIT 2: BELLA SPRINGS POLYETHYLENE TANKS AND AUTOMATED SACHET MACHINE
Source: Company documents.
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EXHIBIT 3: BELLA SPRINGS OPERATIONAL COSTS
Replacements Costs in Ghanaian
Cedis Costs in U.S. Dollars
Filter Replacement GH₵30 US$15
Additional Pump GH₵250 US$128
Sachet Machine GH₵97,392 US$50,000
Source: Created by case authors based on company documents.
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Bella Springs
1. Conduct an analysis of the external environment and the drinking-water industry in Ghana.
2. What are Bella Springs’ sustainable competitive advantages?
3. What risks are inherent in the business?
4. What is the current capacity of the water-filtration system?
5. At the current production rates, when will the company break-even and be able to pay off its large upfront investments?
6. Should Bella Springs expand? If so, when and how?
